Sri Lanka Revokes Power Purchase Agreement with Adani Group Amid Corruption Allegations: Report
Moneylife Digital Team 24 January 2025
Sri Lanka has revoked a power purchase deal with India's Adani group after a probe into US allegations that the conglomerate's executives paid bribes to secure Indian power supply contracts, according to an AFP report published by the Economic Times.
 
The Adani group has categorically rejected these allegations as baseless.
 
While president Anura Kumara Dissanayake's Cabinet has revoked the 20-year deal power purchase deal signed in May 2024, it has not cancelled the project and has appointed a committee to review the project, the AFP reported, citing an official document and an energy ministry official. 
 
Moneylife has covered this previously in detailed here.
 
The revoked agreement, signed in May 2024, was a 20-year deal to establish two wind power stations in the northern region of Sri Lanka, with a total capacity of 484MW (megawatts). This project was poised to involve an investment of approximately US$442mn (million), and the Adani group would have received 8.26 cents per kilowatt-hour for electricity produced.
 
Despite the cancellation of the agreement, Sri Lankan officials have clarified that the project itself is not entirely scrapped; a committee has been appointed to reassess the feasibility of the undertaking, reflecting a cautious approach in navigating the complexities of energy needs amidst political and economic pressures.
 
Sri Lanka's decision to review its energy partnerships comes against the backdrop of an ongoing energy crisis, worsened by a financial meltdown and fuel shortages that have plagued the island nation since 2022. As the government seeks to increase its share of renewable energy, the cancellation of the Adani deal may stem from a broader desire to explore cheaper energy options offered by smaller renewable projects that have emerged as competitive alternatives.
 
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